REAL ESTATE DEFINITIONS

Buying a home is an exciting yet challenging process, even if you have purchased a home before. Throughout the course you may read or hear words that you have never heard before or do not understand. To help you better understand real estate terminology, the following are definitions to the most common real estate terms.

Active - An "Active" status is the most common for homes listed for sale in the Multiple Listing Service (MLS).

Addendum - Documents included with a Purchase and Sale Agreement that list additional information and/or requests made for other items not stated in the agreement.

Adjustable Rate Mortgage - The cost of a loan or other financing as an annual rate. The APR includes the interest rate, points, broker fees and certain other credit charges a borrower is required to pay.

Amortization - The repayment of loan principal through equal payments over a designated period of time consisting of both principal and interest.

Annual Percentage Rate (APR) - The true annual interest rate payable for a loan in one year taking account of all charges made to the borrower, including compound interest, discount points, commitment fees, mortgage insurance premiums.

Appraisal - A professional analysis used to estimate the value of the property. This includes examples of sales of similar properties.

Appreciation - An increase in the market value of a home due to changing market conditions and/or home improvements.

Arbitration - A process where disputes are settled by referring them to a fair and neutral third party (arbitrator). The disputing parties agree in advance to agree with the decision of the arbitrator. There is a hearing where both parties have an opportunity to be heard, after which the arbitrator makes a decision.

Assessed Value - Typically the value placed on property for the purpose of taxation, established by the local tax assessor.

Assessment - The value assigned to your home by a government tax assessor to determine property tax payments. The assessment is based on a comparison of the prices of similar homes that recently sold in the neighborhood.

Assessor Parcel Number (APN) - The APN is unique number assigned to each plot of land by a county tax assessor. The number is based on formatting codes depending on the home's location. The local government use APN numbers to identify and keep track of land ownership for property tax purposes.

Backup Offer - An additional offer on a home for sale where the sellers have already accepted an offer. The sellers will indicate if they are accepting backup offers if they think the current offer might not go through.

Balloon Mortgage - A mortgage with monthly payments often based on a 30-year amortization schedule, with the unpaid balance due in a lump sum payment at the end of a specific period of time (usually 5 or 7 years). The mortgage may contain an option to “reset” the interest rate to the current market rate and to extend the due date if certain conditions are met.

Balloon Payment - A final lump sum payment that is due, often at the maturity date of a balloon mortgage.

Broker - An individual or firm that acts as an agent between providers and users of products or services, such as a mortgage broker or real estate broker.

Broker Price Opinion (BPO) - A Broker Price Opinion is an estimate of a home's value, as determined by a real estate broker. Banks often order BPOs instead of appraisals during short sales, foreclosures, or loan refinancing, since BPOs are usually less than half the cost of an appraisal.

Building Code - Local regulations that set forth the standards and requirements for the construction, maintenance and occupancy of buildings. The codes are designed to provide for the safety, health and welfare of the public.

Buyer's Agency Agreement - A real estate document a prospective buyer signs once they decide to work with a real estate agent and their brokerage.

Buyer's Agent - The buyer's agent is the real estate agent that represents buyers when they purchase a home. This agent negotiates with the listing agents representing home-sellers to come to a final sale price agreed upon by both the buyers and the sellers. The buyer's agent is paid once a deal closes through a selling office commission determined by the sellers of the home.

Buyer's Market - A buyer's market is one in which there are more sellers and homes for sale than buyers. Since supply is greater than demand, homes will be lower priced, making them more attractive to buyers. In contrast, a seller's market is one in which there are lots of buyers and relatively few homes for sale, which leads to multiple offer situations that drive up prices.

Capitalization Rate (Cap Rate) - A percentage that relates the value of an income producing property to its future income, expressed as net operating income divided by purchase price.

Certificate of Occupancy - A document issued by the local government which certifies that a newly constructed home is in compliance with local building codes and is in livable condition.

Chain of Title - The history of all of the documents that have transferred title to a parcel of real property, starting with the earliest existing document and ending with the most recent.

Closing - The process of completing a financial transaction. For mortgage loans, the process of signing mortgage documents, disbursing funds, and, if applicable, transferring ownership of the property. See also “Settlement.”

Closing Costs - Upfront fees charged in connection with a mortgage loan transaction. Money paid by a buyer for the closing of a mortgage loan, generally including, but not limited to a loan origination fee, title examination, insurance, survey, attorney’s fee, and prepaid items such as taxes and insurance.

Commission - The fee charged for services performed, usually based on a percentage of the price of the items sold (such as the fee a real estate agent earns on the sale of a house).

Comparables - Abbreviation for "comparable properties" which are used as a comparison in determining the current value of a property being appraised.

Comparative Market Analysis (CMA) - An evaluation of similar, recently sold homes (also called comparables) that are near a home intended to be bought or sold. It establishes a price estimate based on current market activity that can be used as a guide for pricing a home for sale.

Concession - Something given up or agreed to in negotiating the sale of a house. For example, the sellers may agree to help pay for closing costs.

Condominium - A unit in a multi-unit building. The owner of a condominium unit owns the unit itself and has the right, along with other owners, to use the common areas but does not own the common elements such as the exterior walls, floors and ceilings or the structural systems outside of the unit; these are owned by the condominium association. There are usually condominium association fees for building maintenance, property upkeep, taxes and insurance on the common areas and reserves for improvements.

Contingency - A condition that must be met before a contract is legally binding. For example, home purchasers often include a home inspection contingency; the sales contract is not binding unless and until the purchaser has the home inspected.

Conventional Mortgage - A mortgage loan that is not insured or guaranteed by the federal government or one of its agencies, such as the Federal Housing Administration (FHA), the U.S. Department of Veterans Affairs (VA), or the Rural Housing Service (RHS). Contrast with “Government Mortgage.”

Covenants, Conditions & Restrictions (CC&Rs) - Limits and rules placed on a group of homes by a builder, developer, neighborhood association or Homeowners Association.

Counter Offer - An offer made in response to a previous offer. For example, after the buyer presents their first offer, the seller may make a counter offer with a slightly higher sale price.

Debt-to-Income Ratio - The percentage of gross monthly income that goes toward paying for your monthly housing expense, alimony, child support, car payments, other installment debts, and payments on revolving or open ended accounts, such as credit cards.

Deed - The legal document transferring ownership or title to a property.

Deed of Trust - A legal document in which the borrower transfers title to a 3rd party (trustee) to hold as security for the lender. When the loan is paid in full, the trustee transfers title back to the borrower. If the borrower defaults on the loan, the trustee can sell the property to pay the mortgage debt.

Deed-in-Lieu of Foreclosure - The transfer of title from a borrower to the lender to satisfy the mortgage debt and avoid foreclosure.

Default - Failure to fulfill a legal obligation. A default includes failure to pay on a financial obligation, but also may be a failure to perform some action or service that is non monetary. For example, when leasing a car, the lessee is usually required to properly maintain the car.

Department of Housing and Urban Development (HUD) - Established in 1965, the Department of Housing and Urban Development (HUD) is a government agency that enforces fair housing laws and controls the Federal Housing Administration the main insurer of non conventional mortgage loans. The HUD issues documents that must be included in every real estate transaction in the US.

Discount Point - A fee paid by the borrower at closing to reduce the interest rate. A point equals one percent of the loan amount.

Down Payment - A portion of the price of a home, usually between 3-20%, not borrowed and paid up front in cash.

Earnest Money Deposit - The deposit to show that you’re committed to buying the home. The deposit usually will not be refunded to you after the seller accepts your offer, unless one of the sales contract contingencies is not fulfilled.

Easement - A right to the use of, or access to, land owned by another.

Encroachment - The intrusion onto another persons property without right or permission.

Encumbrance - Any claim on a property, such as a lien, mortgage or easement.

Equal Credit Opportunity Act (ECOA) - A federal law that requires lenders to make credit equally available without regard to the applicant’s race, color, religion, national origin, age, sex, or marital status; the fact that all or part of the applicant’s income is derived from a public assistance program; or the fact that the applicant has in good faith exercised any right under the Consumer Credit Protection Act. It also requires various notices to consumers.

Equity - The value in your home above the total amount of the liens against your home. If you owe $100,000 on your house but it is worth $130,000, you have $30,000 of equity.

Escrow - An item of value, money, or documents deposited with a third party to be delivered upon the fulfillment of a condition. For example, the deposit by a borrower with the lender of funds to pay taxes and insurance premiums when they become due, or the deposit of funds or documents with an attorney or escrow agent to be disbursed upon the closing of a sale of real estate.

Estate Sale - A sale that occurs when a homeowner dies or moves to an assisted living facility. Those who inherit the home get the proceeds from the sale. If the owner dies without naming someone in the will to sell the house, an estate sale is called a probate sale, because a probate court appoints a relative or friend of the deceased to handle the sale.

Eviction - The legal act of removing someone from real property.

Exclusive Agency Listing - A listing agreement under which a real estate broker (known as the listing broker) acts as an exclusive agent to sell the property for the property owner, but may be paid a reduced or no commission when the property is sold if, for example, the property owner rather than the listing broker finds the buyer. This kind of listing agreement can be used to provide the owner a limited range of real estate brokerage services rather than the traditional full range. As with other kinds of listing agreements, if a second real estate broker (known as a selling broker) finds the buyer for the property, then some commission will be paid to the selling broker.

Exclusive Right to Sell Listing - The traditional kind of listing agreement under which the property owner appoints a real estate broker (known as the listing broker) as exclusive agent to sell the property on the owner’s stated terms, and agrees to pay the listing broker a commission when the property is sold, regardless of whether the buyer is found by the broker, the owner or another broker. This is the kind of listing agreement that is commonly used by a listing broker to provide the traditional full range of real estate brokerage services. If a second real estate broker (known as a selling broker) finds the buyer for the property, then some commission will be paid to the selling broker.

Expired - When a seller contracts an agent to sell their home, the listing agreement will have a set expiration date. The listing agreement expires when this expiration date has passed without the property being sold, and without the seller renewing the listing contract with the real estate agent.

Fair Housing Act - A law enacted as part of civil rights legislation that prohibits discrimination of home sales, rentals and financing based on race, color, national origin, religion, sex, familial status or those with disabilities.

Fair Market Value - The price at which property would be transferred between a willing buyer and willing seller, each of whom has a reasonable knowledge of all pertinent facts and is not under any compulsion to buy or sell.

Fannie Mae - A New York stock exchange company. It is a public company that operates under a federal charter and is the nation’s largest source of financing for home mortgages. Fannie Mae does not lend money directly to consumers, but instead works to ensure that mortgage funds are available and affordable, by purchasing mortgage loans from institutions that lend directly to consumers.

Federal Housing Administration (FHA) - An agency within the U.S. Department of Housing and Urban Development (HUD) that insures mortgages and loans made by private lenders.

Fee Simple - The greatest possible interest a person can have in real estate.

Fixed Rate Mortgage - A mortgage with an interest rate that does not change during the entire term of the loan.

Flipping - A real estate term for buying a home and then turning around and reselling it for a profit.

Flood Insurance - Insurance that compensates for physical property damage resulting from flooding. It is required for properties located in federally designated flood hazard zones.

Foreclosure - A legal action that ends all ownership rights in a home when the home buyer fails to make the mortgage payments or is otherwise in default under the terms of the mortgage.

For Sale By Owner (FSBO) - A home the owner is selling himself without the services of a licensed real estate agent. The owner avoids paying an agent to sell his own house and typically does not pay a commission to the agent of any potential buyers. As a result, buyers' agents don't have an incentive to show the property to their clients, and the home cannot appear in the Multiple Listing Service (MLS).

Freddie Mac - Along with Fannie Mae, Freddie Mac is a government sponsored entity that buys loans from mortgage lenders, packages them together and sells them to outside investors to make sure they have funds to continue buying loans, which increases the flexibility and liquidity of the mortgage market.

Good Faith Estimate - A form required by the Real Estate Settlement Procedures Act (RESPA) that discloses an estimate of the amount or range of charges, for specific settlement services the borrower is likely to incur in connection with the mortgage transaction.

Grantee - The person to whom an interest in real property is conveyed.

Grantor - The person conveying an interest in real property.

Hazard Insurance - Insurance coverage that compensates for physical damage to a property from fire, wind, vandalism, or other covered hazards or natural disasters.

Home-Equity Line of Credit (HELOC) - A type of revolving loan, that enables a home owner to obtain multiple advances of the loan proceeds at his or her own discretion, up to an amount that represents a specified percentage of the borrower’s equity in the property.

Home Inspection - A professional inspection of a home to determine the condition of the property. The inspection should include an evaluation of the plumbing, heating and cooling systems, roof, wiring, foundation and pest infestation.

Homeowners Association - An organization of homeowners residing within a particular area whose principal purpose is to ensure the provision and maintenance of community facilities and services for the common benefit of the residents.

Homeowner's Insurance - A policy that protects you and the lender from fire or flood, which damages the structure of the house; a liability, such as an injury to a visitor to your home; or damage to your personal property, such as your furniture, clothes or appliances.

HUD-1 Settlement Statement - A final listing of the closing costs of the mortgage transaction. It provides the sales price and down payment, as well as the total settlement costs required from the buyer and seller.

Interest Rate - Interest is the cost of borrowing money. Interest rates change daily, but once a borrower locks a rate for a fixed rate mortgage, she will make her payments according to this rate for the entire life of the loan. The interest rate is expressed as a yearly percentage that you pay on a monthly basis as part of your mortgage loan.

Joint Tenancy - A form of ownership or taking title to property which means each party owns the whole property and that ownership is not separate. In the event of the death of one party, the survivor owns the property in its entirety.

Jumbo Loan - A loan that exceeds the mortgage amount eligible for purchase by Fannie Mae or Freddie Mac. Also called “non conforming loan.”

Lien - A claim or charge on property for payment of a debt, such as a mortgage, where the lender has the right to take the title to your property if you don’t make the mortgage payments.

Lis Pendens - Sometimes called a notice of default, a lis pendens is a public document filed by a lender that notifies a borrower that he has fallen two payments behind on his mortgage. The receipt of this document begins the foreclosure process in which the lender will repossess the home. However, the borrower still has the option to try to sell the home as a short sale or refinance to stay in the home. But, the home is considered to be in pre-foreclosure from the time a lis pendens is filed until the property is sold at an auction.

Listing - A term for any kind of single family home, condominium, townhouse or piece of land for sale. The listing may come from the MLS, from a bank's site if it's bank-owned, or be sold directly by the owner without agent representation.

Listing Agent - An individual that helps homeowners sell their home. Not to be confused with the selling agent that represents buyers, the listing agent is in charge of helping the owners sell their home at the highest price possible. The listing agent negotiates with the selling agent to come to a price agreed upon by both the buyers and the sellers, then works with escrow or the attorney handling the closing to make sure the deal closes on time.

Loan Commitment Letter - A lender's promise to provide a borrower with a loan at an agreed upon interest rate and terms over a certain period of time. Borrowers need to provide the sellers with this document within a certain time frame after they reach mutual acceptance on an offer to satisfy their financing contingency.

Loan Origination - The process by which a loan is made, which may include taking a loan application, processing and underwriting the application, and closing the loan.

Loan to Value Ratio (LTV) - The amount of money borrowed in relation to the total market value of a property. Expressed as the loan amount divided by the property value.

Lock-In (Rate Lock) - A written agreement guaranteeing a specific mortgage interest rate for a certain amount of time.

Manufactured Home - Homes that are built entirely in a factory in accordance with a federal building code administered by the U.S. Department of Housing and Urban Development (HUD). Manufactured homes may be single or multi-section and are transported from the factory to a site and installed. Homes that are permanently affixed to a foundation often may be classified as real property under applicable state law, and may be financed with a mortgage. Homes that are not permanently affixed to a foundation generally are classified as personal property, and are financed with a retail installment sales agreement.

Market Value - The current value of your home based on what a purchaser would pay. An appraisal is sometimes used to determine market value.

Mello-Roos - A California state assessment that goes toward developing the infrastructure in the surrounding community where a home is bought. Mello-Roos districts will sell public bonds to provide funds for public services and impose an assessment on residents to make principal and interest payments. Services include maintenance for streets, water, sewage, electricity, infrastructure, schools and parks.

Mortgage Loan - A loan using your home as collateral. In some states the term mortgage is also used to describe the document you sign (to grant the lender a lien on your home). It also may be used to indicate the amount of money you borrow, with interest, to purchase your house. The amount of your mortgage often is the purchase price of the home minus your down payment.

Mortgage Broker - An individual or firm that brings borrowers and lenders together for the purpose of loan origination. A mortgage broker typically takes loan applications and may process loans. A mortgage broker also may close the loan.

Mortgage Insurance - Insurance that protects lenders against losses caused by a borrower’s default on a mortgage loan. MI typically is required if the borrower’s down payment is less than 20 percent of the purchase price.

Mortgage Lender - The lender providing funds for a mortgage. Lenders also manage the credit and financial information review, the property and the loan application process through closing.

Multi-Family - Housing units that accommodate more than one family or household

Multiple Listing Service (MLS) - A clearinghouse through which member real estate brokerage firms regularly and systematically exchange information on listings of real estate properties and share commissions with members who locate purchasers. The MLS for an area is usually operated by the local, private real estate association as a joint venture among its members designed to foster real estate brokerage services.

Mutual Acceptance - The point when both the buyer and seller agree on the price and terms of a deal. Both parties will sign the Purchase and Sale Agreement at which point the buyer should schedule an inspection and deposit their earnest money within one to three business days.

National Association of Realtors (NAR) - An organization of over 1.3 million realtors, brokers, appraisers and others involved in the residential and commercial real estate industries that agree to a code of ethics and to arbitrate their disputes among themselves rather than in court. A real estate agent can only be called a Realtor if he or she belongs to the National Association of Realtors.

Natural Hazard Disclosure Act - A California state law requiring sellers and their listing agent to provide prospective buyers with a Natural Hazard Disclosure statement prepared by a city engineer, geologist or land surveyor. The disclosure designates whether the home they're selling is located in a hazard area, which include flood, fire, earthquake fault and seismic hazard zones, and if the home is subject to Mello-Roos tax.

Negative Amortization Loan - An increase in the balance of a loan caused by adding unpaid interest to the loan balance; this occurs when the payment does not cover the interest due.

Net Proceeds - This is the amount of money a homeowner takes away from selling their home. Net proceeds are calculated by taking the gross sale price of a home and subtracting costs, including the balance of all outstanding mortgages, any liens on the property, commissions to the seller's and buyer's agent, excise tax, and any additional closing costs owed by the seller. If net proceeds are negative, the seller must either bring money to ensure all mortgages are paid off or get bank approval for a short sale, which your agent can help you determine.

Note - A written promise to pay a specified amount under the agreed upon conditions.

Note Rate - The interest rate stated on a mortgage note, or other loan agreement.

Notice of Default - A formal written notice to a borrower that a default has occurred and that legal action may be taken.

Owner-Occupied Property - A property that serves as the borrower’s primary residence.

Pending - A home that is set to close and all contingencies have been waived.

Per Diem - Latin for "per day," per diem charges may result if the buyer's loan isn't approved by the date indicated on the financing contingency on an offer. They will appear on the HUD-1 settlement form payable to the lender and is the most common per diem cost. Sellers may also charge the buyer per diem fees if the deal doesn't close on the date listed on the Purchase and Sale Agreement.

Planned Unit Development (PUD) - A real estate project in which individuals hold title to a residential lot and home while the common facilities are owned and maintained by a homeowners’ association for the benefit and use of the individual PUD unit owners.

Pocket Listings - A new listing a broker posts to their site or markets to their own clients before listing the home in the Multiple Listing Service (MLS). Brokers must agree to share these listings publicly 24 hours after the homeowner signs the listing agreement.

Power of Attorney - A legal document that authorizes another person to act on one’s behalf. A power of attorney can grant complete authority or can be limited to certain acts and/or certain periods of time.

Pre-Approval - A process by which a lender provides a prospective borrower with an indication of how much money he or she will be eligible to borrow when applying for a mortgage loan. This process typically includes a review of the applicant’s credit history and may involve the review and verification of income and assets to close.

Pre-Payment Penalty - A fee that a borrower may be required to pay to the lender, in the early years of a mortgage loan, for repaying the loan in full or prepaying a substantial amount to reduce the unpaid principle balance.

Pre-Qualification - A preliminary assessment by a lender of the amount it will lend to a potential home buyer. The process of determining how much money a prospective home buyer may be eligible to borrow before he or she applies for a loan.

Principal - The amount of money borrowed or the amount of the loan that has not yet been repaid to the lender. This does not include the interest you will pay to borrow that money. The principal balance (sometimes called the outstanding or unpaid principal balance) is the amount owed on the loan minus the amount you’ve repaid.

Private Mortgage Insurance (PMI) - Insurance for conventional mortgage loans that protects the lender from loss in the event of default by the borrower. See Mortgage Insurance

Probate Sale - A legal process in which a court oversees the settlement of an individual's estate after his death, when the deceased's will doesn't specify who should inherit his property. The process can be difficult and involves extra fees for court and attorney costs to settle any lien disputes over the estate.

Property Tax - The tax paid by homeowners to the government determined by an assessment. Homeowners pay this tax annually, semi-annually or as part of a monthly mortgage payment. Depending on when a buyer actually closes on his loan, some of this property tax may be due at the time of closing.

Purchase and Sale Agreement - A document that details the price and conditions for a transaction. In connection with the sale of a residential property, the agreement typically would include: information about the property to be sold, sale price, down payment, earnest money deposit, financing, closing date, occupancy date, length of time the offer is valid, and any special contingencies.

Quitclaim Deed - A deed that transfers without warranty whatever interest or title a grantor may have at the time the conveyance is made.

Real Estate Owned (REO) - REOs are foreclosed homes owned by banks and lenders, which are often priced below market value to create bidding wars among buyers. When purchasing an REO, buyers should get pre-approved with the bank that owns the property and try to submit an offer with few contingencies, a high earnest money deposit and no requests to the bank to pay for closing costs.

Real Estate Professional - An individual who provides services in buying and selling homes. The real estate professional is paid a percentage of the home sale price by the seller. Unless you’ve specifically contracted with a buyer’s agent, the real estate professional represents the interest of the seller. Real estate professionals may be able to refer you to local lenders or mortgage brokers, but are generally not involved in the lending process.

Real Estate Settlement Procedures Act (RESPA) - A federal law that requires lenders to provide home mortgage borrowers with information about transaction related costs prior to settlement, as well as information during the life of the loan regarding servicing and escrow accounts. RESPA also prohibits kickbacks and unearned fees in the mortgage loan business.

Realtor - A real estate agent, broker or an associate who holds active membership in a local real estate board that is affiliated with the National Association of Realtors

Refinance - Getting a new mortgage with all or some portion of the proceeds used to pay off the prior mortgage.

Rescission - The cancellation or annulment of a transaction or contract by operation of law or by mutual consent. Borrowers have a right to cancel certain mortgage refinance and home equity transactions within three business days after closing, or for up to three years in certain instances.

Right of Refusal - A provision in an agreement that requires the owner of a property to give another party the opportunity to purchase or lease the property before he or she offers it for sale or lease to others.

Second Mortgage - A mortgage that has a lien position subordinate to the first mortgage.

Secured Loan - A loan that is backed by property such as a house, car, jewelry, etc.

Seller Disclosure - Documents completed by the seller of a home listing any known issues with the property, as well as any remodel projects completed during the time they owned the home. This information is useful, but should not substitute for an inspection by a licensed inspector.

Seller's Market - A seller's market is one in which there are more buyers than homes for sale. Since supply is less than demand, homes will be higher priced and more attractive to the sellers in the market. In contrast, a buyer's market is one in which there are lots of sellers and relatively few buyers, which leads to lower prices.

Settlement - The process of completing a loan transaction at which time the mortgage documents are signed and then recorded, funds are disbursed, and the property is transferred to the buyer (if applicable). Also called closing or escrow in different jurisdictions. See also “Closing”

Short Sale - A home that is listed for sale at a price lower than the amount owed on the mortgage. Homeowners hope to sell their home as a short sale to avoid penalties associated with going into foreclosure. What can make it difficult to buy a short sale is that there are often two mortgages on the home and both lenders must approve the sale. The ownership of the mortgages on a short sale home usually belong to more than one party, so you'll likely have to convince multiple banks and lenders to take a loss on their original loan. This is why it often takes so long to approve a short sale offer. If the short sale fails and the homeowner can't afford to pay his mortgage, then the bank forecloses on the home.

Single Family Residence (SFR) - One to four unit properties including detached homes, townhouses, condominiums, and cooperatives, and manufactured homes attached to a permanent foundation and classified as real property under applicable state law.

Special Assessments - There are two definitions for special assessments. The first definition refers to fees that Homeowners Associations will charge to owners to cover the costs of building repair that exceed the amount in the current budget. Buyers usually receive the CC&Rs within a week after submitting an offer. A second definition for special assessments refers to dues that the local city government charges on homeowners for utilities, road maintenance, and other services like fire protection and street lighting.

Subject to Inspection (STI) - A home where a potential buyer made an offer and signed the Purchase and Sale Agreement but a successful closing is still contingent upon conducting a home inspection and negotiating over any repairs or concessions before the inspection contingency period expires.

Survey - A precise measurement of a property by a licensed surveyor, showing legal boundaries of a property and the dimensions and location of improvements.

Taxes and Insurance - Funds collected as part of the borrower’s monthly payment and held in escrow for the payment of the borrower’s, or funds paid by the borrower for, state and local property taxes and insurance premiums.

Tenants in Common - As opposed to joint tenancy, when there are two or more individuals on title to a piece of property, this type of ownership does not pass ownership to the others in the event of death.

Termite Inspection - An inspection to determine whether a property has termite infestation or termite damage. In many parts of the country, a home must be inspected for termites before it can be sold.

Title - The right to, and the ownership of, property. A title or deed is sometimes used as proof of ownership of land.

Title Insurance - Insurance that protects lenders and homeowners against legal problems with the title.

Townhouse - A type of home that's usually constructed as a two or three story unit with a common wall or walls bordering the adjacent unit. The common form of ownership is similar to a condominium project in that the property owner not only owns his or her respective unit, but also an undivided interest in any common area. Townhouse ownership sometimes differs from condominium ownership in that the townhouse owner owns the physical structure rather than just the airspace between the walls, floor and ceiling.

Truth in Lending Act (TILA) - A federal law that requires disclosure of a truth in lending statement for consumer credit. The statement includes a summary of the total cost of credit, such as the annual percentage rate (APR) and other specifics of the credit.

Turn Key - Turn key is a term used by listing agents in marketing remarks to indicate that the home is move in ready.

Under Contract - A home where a potential buyer made an offer and signed the Purchase and Sale Agreement, but a successful closing is still contingent upon financing and inspections.

Underwriting - The process used to determine loan approval. It involves evaluating the property and the borrower’s credit and ability to pay the mortgage.

Uniform Residential Loan Application - A standard mortgage application you will have to complete. The form requests your income, assets, liabilities, and a description of the property you plan to buy, among other things.

Up Front Costs - What costs buyers need to pay out of pocket after an offer is accepted, which can include earnest money and inspection costs.

Vacancy Rate - The percentage of the total supply of units or space of a specific commercial type that is vacant and available for occupancy at a particular point in time within a given market.

Veteran's Affairs Loan (VA Loan) - A mortgage loan that is guaranteed by the U.S. Department of Veterans Affairs (VA), who is a federal government agency that provides benefits to veterans and their dependents, including health care, educational assistance, financial assistance, and home loans.

Walk Through - A common clause in a sales contract that allows the buyer to examine the property being purchased at a specified time immediately before the closing, for example, within the 24 hours before closing.

Withdrawn - When the seller contracts with an agent to sell her home, the listing agreement will have a set expiration date. When a listing is withdrawn, the seller has canceled the listing contract with her agent before the contract's agreed upon expiration date.